Next week we release the Manhattan 1Q 2012 market report. I’m sifting through the data now but I thought I’d take a shot at seeing ahead into the second quarter sales based on listing activity in the first quarter. I realize this is fraught with statistical pitfalls and I am using too many graphic elements in this one but hey, this is Curbed and I’m USING arrows…
I am not a smoker. I’m highly allergic to smoke and tobacco. A number of relatives of mine have died from lung cancer, second hand smoke and other smoking related illnesses. I wish people wouldn’t smoke (and better able to quit) so I struggle to be neutral in my view of it’s impact on property values.
My quote on the issue for the Brick Underground piece was:
“I am not aware of any compelling studies that provide empirical evidence proving a smoking ban impacts values one way or another,” said Jonathan Miller, president and CEO of Miller Samuel, a real estate appraisal and consulting firm. “Personally, I would think such a ban would be slightly more of a help to values than a hindrance, since the number of smokers are on the decline — and the idea of selling the health benefits of a lack of secondhand smoke would be a plus.”
The policy momentum of our society has grown with the elimination of smoking on airplanes, public transportation, commercial buildings, public spaces and they all speak to the issue of invasiveness. Forcing non-smokers to breath something that has been shown to be unhealthy, even lethal, is no longer tolerated and anti-smoking public policy continues to expand.
So the issue as it relates to multi-family housing would seems to be the next shoe to drop with public policy. Perhaps that is already happening and I’m not aware of it.
Even though a smoker may own their residence and have the right to enjoy it as they see fit, the impact of their behavior moving outside their domicile (i.e. smoke permeating walls and air exchanges) would seem to be invasive and not their right.
With possibly one exception
Grandfathering. As an apartment homeowner, they may have had the right to smoke when the property was purchased and I don’t see how their bundle of rights as a property owner can be altered. They followed the rules and non-smokers who purchased during that era would be aware that there was no ban on smoking.
A new building that bans smoking from day one – that’s not a problem.
But back to the valuation issue. I think I see more potential downside to property values in the long run within buildings that allow smoking to new buyers than to a value upside in buildings that never allowed smoking from day one.
Admittedly I’m merely voicing a subjective opinion. I’m relying on the logic that societal norms will continue to move away from public smoking tolerance.
Posted by Jonathan J. Miller -Saturday, March 24, 2012, 10:00 AM 1 Comment
REBNY is the trade group for the commercial and residential real estate industry in NYC. Here’s video that remains on their home page that addresses the issue of inconsistent tax liability between the four tax classifications.
I’ve been remiss in not posting this video since it was produced more than a year ago but it was well done, whatever your view on this issue is. My friend, journalist, columnist, former Crain’s editor and blogger Greg David as well as a number of well respected New York real estate types participate.
What could go wrong? Well, as Aaron Task and I discuss with Jonathan Miller, president and chief executive officer of appraisal firm Miller Samuel and proprietor of the authoritative Matrix real estate blog, pretty much everything.
From the heavy comment volume on the post, I’d say the take for Yahoo! Finance readers to Dan’s question was: NO
Posted by Jonathan J. Miller -Thursday, March 22, 2012, 7:22 AM Comments Off
The New York Fed publishes a coincident index using data on employment, real earnings, the unemployment rate and average weekly hours worked in manufacturing and its beginning to show nominal weakness. This comes out monthly and I keep an eye on it. The employment numbers were rebenchmarked in 2011 which made the second half of last year better than originally reported.
Posted by Jonathan J. Miller -Wednesday, March 21, 2012, 9:43 AM Comments Off
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When I was contacted to do yesterday’s Bloomberg interview, a by-product of the producer’s call was to show the affordability of housing to Wall Street. We never covered it in the interview and I was (self) taught never to waste a good charting opportunity.
While there is no reliable causation measure of bonus size to Manhattan housing prices there has long been a connection (i.e. common sense). I took the Manhattan annual average sales price for the past 20 years and compared it to the average annual Wall Street bonus per person. The resulting multiplier shows some element of affordability: the higher the multiplier, the less affordable Manhattan housing is.
I realize there are disclaimers needed in doing this including:
With the regulatory overlay from DC rising, bonuses are becoming smaller relative to overall compensation.
Not everyone on Wall Street getting a bonus lives in Manhattan (but a
disproportional amount probably do).
Bonus income is just less than half of total Wall Street compensation.
Post-Lehman saw higher share of deferred bonus over cash.
Wall Street total comp only accounts for about 25% of total NYC wages.
Foreign buyers and Fortune 500 type executives have picked up some of the Wall Street slack.
With those disclaimers aside or perhaps because of them, the chart shows:
The 20 year trend shows greater affordability over time but significant volatility along the way.
The early 1990’s recession, 2001 recession and 2008 credit crunch/recession all showed sharp reductions in affordability (higher multiplier).
The 20 year average annual multiplier is 9.9
Given the fact that sales contract activity seems to be ahead of last year, prices remain stable, foreign buyers continue to participate in large numbers and the economy is grinding towards improvement in the region, the decline in bonuses doesn’t appear to be a huge deal for the housing market at this point. Certainly not helpful but perhaps can be characterized as having a nominal impact on the market – if you believe this methodology.
Posted by Jonathan J. Miller -Tuesday, March 20, 2012, 10:32 PM Comments Off
Was invited to be on Bloomberg TV’s Street Smart today with Trish Regan to talk about the outlook for Manhattan housing prices with particular attention paid to reduced bonus compensation. Always fun to go to BB.
True (funny) story just before I did the interview:
I was getting mic’ed up and makeup applied while waiting for my turn on the set when I looked up and standing in front of me was Patrick Doyle of Domino’s Pizza holding a large pizza box as a prop for his appearance (It must have been warm because it smelled great).
I introduced myself and he couldn’t have been nicer, and a bit self conscious standing in a newsroom holding a pizza box. I immediately remembered his latest commercial – my kid’s and I were commenting on it last weekend while watching March Madness. I quipped to him that I had a few ideas that could make me CEO – he cracked a smile and then proceeded to do a great interview – check out his closing line in the commercial so my story makes sense.
This is the final chart of the Manhattan scatter graph trifecta. I thought this format was a great way to look at the entirety of the market with better context. This week I am literally long on graphics and short on text. I used the same approach as two weeks ago but divided the market into easier-to-view scaled segments and then placed them on top of each other aligned by years. A few things stood out:…
Had a fun interview with Tom and Sara this morning on the always MUST watch/listen Bloomberg Surveillance. We talked housing, rentals, vacancy and inventory. An added bonus was the addition of Adam Davidson – co-founder and co-host of Planet Money... Read More